Raise interest rates to protect savings, Bank urged

A campaign group has written to the Bank of England calling on its rate-setting Monetary Policy Committee to raise the cost of borrowing.

Save Our Savers argued that a combination of very low interest rates and stubbornly high inflation has wiped as much as £50 billion from the value of savings during the past year.

The MPC, however, has persisted with its policy of keeping rates low in an effort to encourage business lending and to boost the pace of economic recovery. Official interest rates were kept at their historic low of 0.5 per cent for yet another month.

In its letter, Save Our Savers maintained that the retired have been particularly badly hit by the poor returns on their money that low interest rates are delivering.

The group said: "For many this is not a temporary setback. Its effect will permanently reduce the value of their future income."